"Choosing the right area can be a difficult decision; particularly for a permanent move. Try to imagine your existing life in that area and see if it would work. Do you want rural isolation or urban convenience? Most people find it easier to integrate in a more populated community and that shouldnt be overlooked; especially on your first move outside your home country." (EC, Aug 2011)
What do you think are the first things to consider when embarking on looking to buy a property in France?
Choosing the right area can be a difficult decision; particularly for a permanent move. Try to imagine your existing life in that area and see if it would work. Do you want rural isolation or urban convenience? Most people find it easier to integrate in a more populated community and that shouldnt be overlooked; especially on your first move outside your home country.
What is the best way to find ‘your ideal property’?
Apart from the obvious route of using estate agencies some notaires sell homes which don’t feature in all the local agents’ windows. Properties are often sold through a multi-agency arrangement and prices vary so shop around before you commit. The vendor price should be the same with all agencies so any difference ought to be just the variation in agency fee, but sometimes one agency will be told quicker than others when a price drops. Private sales tend to be more prevalent on the other side of the Channel and they are well worth exploring, but do check out local prices in the agencies for a fair comparison.
Is the process of buying a property in France similar to say, buying a property in the UK?
No. In France you will be expected to sign the contract very soon after the price is agreed and before a notaire has investigated the title or carried out any searches. The buyer’s only protection comes in the form of "release" clauses in the contract so it is critical that release clauses which protect you are both present and accurate. The UK system offers a lot more breathing space as you’re only expected to sign the contract once your solicitor is satisfied it is safe for you to do so.
Once you have found a property to buy, what are the main steps to completion and normally how long does it take?
You should allow three months from choosing your new home and getting possession. The first step is signing the contract. Once the cooling off period has expired, this will be sent to the notaire to prepare the transfer.
What are the common pitfalls when buying a property?
Assuming the French law and buying process is similar to the UK. It is not. Buyers can protect themselves by thoroughly investigating a property before signing the contract and getting the document reviewed by an independent lawyer on their behalf. French inheritance laws also bear consideration, as they apply to a person’s personal circumstances to ensure the property will pass to the right person.
What are the tax considerations when buying a property? What changes if you become a resident?
EU residents have to pay local taxes on their French property and tax on rental income. If the purchase is over a certain value the new owner may also be liable to wealth tax, which is an annual tax on capital assets. While if you become a French resident you will become liable to tax on your worldwide income. Either way it’s important to seek advice on inheritance tax as bequests to non-related individuals, including step-children, are taxed at 60%. It is sometimes possible to implement tax planning measures.
France has very specific inheritance laws, can you explain what these are?
Wills are much less important in France than say the UK because the law dictates your heirs to a certain extent, irrespective of any provisions you might put in a will. Broadly speaking your children and, to a lesser extent, your spouse inherit your property. You may give a certain portion to whoever you wish. Sometimes it is possible to re-arrange matters but it is important to take advice before you purchase a property, which is after all the largest asset most of us own, as some options are only available beforehand.
What are the other hidden costs when buying a property, if any?
Agents are legally obliged to include their fee in the property’s advertised price (called FAI). You will also have to pay what are often referred to as the notaires costs, but in reality most of this is the transfer tax. On average allow 7% for resales and 2% for new properties. This includes the first resale within five years of it being built. If the property is new the price will also include VAT at 19.6%.
Do you advise every purchaser to have a lawyer during the buying process? Can you explain the difference between a lawyer and a ‘notaire’?
A notaire has a dual role: to transfer the title from the vendor to the purchaser and to collect any taxes due. Each notaire has a duty to act even-handedly and not favour one party over the other. However they often only become involved once the contract has been signed so there is still a need for advice from a lawyer at an early stage. A lawyer has only one client and is bound to act solely in the interests of that client.
What is the process for applying for a French mortgage? How has it changed over the last few years?
Very similar to the UK, although generally you will need to supply far more detailed information in terms of salary etc. Once the offer is received it may not be accepted for a period of 10 days. The notaire will charge approximately 1.5% of the mortgage to register it.
If buying in France can you save money by creating a company?
This is unlikely to save any money as there is a cost to setting it up and running it. It is usually best to keep matters simple, but a French property holding company called an SCI can be useful for inheritance purposes provided all the owners have resident status outside of France.
Do you think that in general buying in France is a good investment opportunity?
For a long time capital values of property stayed pretty much stationary. Over the last 20 years that has changed dramatically and provided France retains its position as a premier tourist destination it is hard to see French property being anything other than a good investment
How do you think the recent slowdown in the market has affected the way people buy now?
Many British people are clearly holding back until sterling improves, but those in the Eurozone, such as Belgium and Holland are still buying, as are the French themselves. Generally buyers are more discerning in their choice of area and property. With no shortage of opportunities on offer, they can afford to be. There is also far less pressure at the moment and buyers can take a little more time.
If people are considering buying in France, why & how should they contact you?
Advice from an independent lawyer can be crucial; especially for anyone unfamiliar with French law or the country’s buying process. Having lived on both sides of the Channel and been involved with French property for ten years I help people negotiate the system simply as well as safely. I can be contacted by phone on 00 44 (0)1323 745628 or email firstname.lastname@example.org